1. Check Your Credit
Your credit is crucial because it’s the first thing a mortgage lender will check. It will also determine the rate you get for your mortgage. Ensure your credit is accurate by requesting a credit report from Equifax, Experian, and TransUnion. This step should be done first to make any necessary changes in your credit before going to a lender. Actions like paying off your debt, making on-time payments, and decreasing your spending will improve your credit score.
2. Create a Budget for your Austin home
Create a budget so you know how much you can afford. The easiest way to find this number is to calculate your debt-to-income ratio (DTI). Lenders calculate this too, so it’s good you know this before applying for a mortgage. Besides your DTI, you have to factor in: a down payment, closing costs, an emergency fund, property taxes, and maintenance.
3. Get Pre-Approved for your Austin home
Once you know how much you’re willing to spend, it’s time to approach a lender. Once a lender pre-approves you, you’ll know how much you can borrow and start to narrow down where you would like to live with the budget you have. Pre-approval will also show sellers you’re a serious buyer that can provide funds (a common concern for sellers), which means you could beat other buyers.
4. Get Familiar with the Austin Neighborhoods
You know how much you have to buy a home with, so now it’s time for the fun part! Visit neighborhoods throughout the day and on different days of the week to get familiar with the community. Doing this research beforehand will help you buy the home that is right for you, not just one available at the time. (Hint: Check out our Neighborhood Spotlight blogs too!)
5. Research the Stats for Austin Homes
With some neighborhoods and home features in mind, you can start to research how much a home is listed for. Choosing a local REALTOR® is crucial as they can perform a comparative market analysis to give you all the facts. They can see how much the home was listed for and what it sold for. This is valuable information to know before making an offer on a home.
6. Save for a Down Payment
In an ideal world, homebuyers put down a 20% down payment to avoid paying private mortgage insurance. This isn’t always ideal, though, especially in Austin where home prices are increasing, but it’s good to put down something over 10%. The more you put down on a down payment, the less you’ll have to pay for the loan, which means cheaper mortgage payments each month.
7. Get a REALTOR®
Having a good REALTOR® on your team is critical to your success. Especially one who’s familiar with this competitive seller’s market!
8. Start Purging
Make the moving process easier by getting rid of stuff now. Pretend as if you were moving this weekend and assess your items. What can stay and move to the next place with you? What can be donated or sold? Moving only what you actually need will save you time and money.
9. Research Moving Options
There are several moving options, but it’s about finding the right one for you. Will you have friends and family come and help you? Are you renting a truck? Are you hiring a moving company? How much does each of these options cost? Along with research, start to collect moving boxes and supplies like tape, wrapping paper, newspaper, etc. This will help you financially instead of buying all these items in one go.
10. Start an Emergency Fund
Besides saving for the down payment, homebuyers have to save for emergencies and additional costs. Closing costs are about 10% of the home’s value, and maintenance and property taxes will be about 1% of the home’s value every year. Do you also have enough saved for emergencies if something stops working or another winter storm hits? What if you want to renovate and buy new furniture for the home? Do you have money for those purchases?